Minister's welcome to LNG 18 Conference

The 18th International Conference and Exhibition on liquefied natural gas will see industry leaders, 5,000 participants and over 250 exhibitors from 60 countries descend upon Perth.

With Australia expected to become the world’s largest exporter of LNG by 2020, there is no better time to host this event and to highlight the strength of Australia’s energy and resources sectors, which accounts for around 10 per cent of our economy and employ more than 300,000 Australians.

Australia’s LNG sector has come a long way since 1989 when our first shipment left the Karratha Gas Plant in the Pilbara, bound for Japan. Since then, global demand for natural gas has increased dramatically, new LNG exporters such as the US have entered the market, and transformative technologies, like floating LNG are revolutionising the development of these vital resources.

However, a rapid increase in supply, including through the US shale gas revolution, has put downward pressure on LNG prices, and in turn, considerable strain on the industry. Throughout these challenging times, we must not forget that the long term prospects for the sector remain strong. Notably, the International Energy Agency forecasts that the global demand for gas will increase by around
50 per cent between now and 2040. Further, a 23 per cent increase in the world’s population between 2010 and 2030 and a more than doubling of the world’s middle class during the same period will only fuel this growth as economies develop.

China remains hungry for energy to power its economic transformation and with its per capita energy consumption still a third of that in the United States, the opportunities for the LNG industry are immense.

Likewise, by 2040, the Indian economy will be five times larger than it is today, while emerging economies such as Indonesia, Malaysia and Pakistan are also looking for solutions to satisfy their growing energy needs. Such economic growth will require reliable energy supplies such as LNG to support this development.

Australia’s LNG export capacity is rapidly expanding, so we can capitalise on these opportunities. Three LNG projects in Queensland and the Gorgon project in Western Australia have commenced production, and the Wheatstone and Prelude facilities in Western Australia and the Ichthys facility in Darwin are under construction. This will see Australia triple its LNG exports by 2020.

While these challenging times remain, we must focus on decreasing the cost of doing business as a means of boosting Australia’s competitiveness. This must include streamlined regulatory processes, greater labour market flexibility and productivity-enhancing infrastructure projects. Innovation, automation, big data analytics and the provision of government-generated geological mapping will also be important.

This work has already begun, with the government implementing a number of important initiatives to ensure these sectors remain strong, including:

  • removing $4.5 billion of red tape, including $546 million each year through one-stop shops for environmental approvals to minimise project delays and costs
  • opening new and expanding existing market opportunities through our free trade agreements with China, Japan and Korea, and the Trans Pacific Partnership
  • implementing a $100 million Exploration Development Incentive to encourage new exploration by junior miners by providing investor tax offsets
  • opening a Major Projects Approval Agency in Darwin to provide a single entry point for advice on regulatory approvals, and facilitating investment in essential economic infrastructure through a $5 billion Northern Australia Infrastructure Facility, and
  • establishing two Industry Growth Centres to expand Australia’s excellence in mining equipment, technology and services, and improve the productivity of our oil, gas, coal and uranium industries.

With large gas reserves, significant experience in large-scale LNG development, a highly skilled workforce and close proximity to Asian markets, Australia is well placed to face the present challenges and capitalise on the enormous opportunities that lie ahead.

I look forward to continuing the discussion about the future development of the gas sector with you at LNG 18.

Enter your details to subscribe to the free fortnightly Gas Today e-newsletter

Thank you for signing up for the Gas Today Online Update.